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Monday, 27 February 2012

Vancouver road pricing? Options considered for revenue raising

Vancouver has a problem raising sufficient revenue to meet its aspirations for improved public transport services. It is seeking to spend an additional C$70 million (US$70 million) per annum on new projects, but can only raise C$40 million of this from a 2c/l increase in fuel tax (so effectively a major contribution from road users). The rest will have to come from increasing unpopular property taxes from 2013 unless other options are selected. Public transport fares are already expected to increase 12.5% to reduce demands for operating subsidies. However, the Vancouver Sun reports that the City of Vancouver is seeking more powers to be granted by the British Columbia government to raise revenue in different ways.

The options are split between short term (such as a carbon tax) and longer term (road pricing). The longer term option suggested is to toll all untolled bridges and entry points into the city, with variations by time of day and location. In other words a moderately sophisticated form of congestion pricing.

The Vancouver Sun reports:

A confidential report, Evaluation of Revenue Sources to Support Transportation Improvements in Metro Vancouver, obtained by The Vancouver Sun, estimates a toll of $1.60 per trip at major bridges and tunnels — which are not named — could raise $100 million a year. Another table suggests toll revenue could total between $100 million and $200 million a year.

A $1.60 toll on vehicles (crossing entry points into the city) would bring in at least $100 million a year...Other options include imposing a toll for each kilometre a vehicle is driven on main roads, suggested at 67 cents per kilometre, or charging vehicle registration fees of $35 and $105.

It is no surprise that a lot of revenue could be raised from such approaches. Without seeing the report, it is impossible to know whether these estimates are fair, especially given that operating costs are likely to be high in initial years. I'm attracted to distance charging because it is the most disaggregated and least distortionary, but it is also the most complex to implement as it would require vehicles to be equipped to measure distance - and so presents issues for those not equipped.

There are already tolls on the Golden Ears Bridge (C$1.45-$C9.85 depending on technology and vehicle used) and tolls are expected to be imposed on new bridges (replacement Pattulo Bridge and replacement Port Mann Bridge). All are collected or to be collected by all electronic systems using DSRC technology. (See CTV news report on the Pattulo Bridge replacement debate).

Langley Mayor Peter Fassbender, vice-chairman of the mayors’ council on regional transportation supports region wide tolls. Blair Lekstrom, Transportation Minister is surprised at that and says that any measures should be palatable (which may mean less than tolls). Richmond Mayor, Malcolm Brodie prefers distance based charging to tolls at city access points because he sees it as fairer.

Another Vancouver Sun report says that Vancouver wide road pricing is the most preferred option, but that it couldn't be implemented in time to meet the 2013 deadline for funding. It said:

A copy of the document obtained by The Sun says the move to road pricing could be implemented in various ways, including by tolling major water crossings, tolling entry and exit points to defined areas of Metro Vancouver — possibly varying by time of day — or by tracking and charging for total kilometres driven. All these options were given high or fairly high ratings on all four criteria taken into account: the impact on people’s transportation choices, the impact on families and the economy, fairness and transparency, and the ability to generate and sustain revenues.

This indicates a lot of official support for road pricing options.

I welcome the debate about road pricing for Vancouver. Obviously there are options for tolling crossing points around the city (the map below shows the three bridges tolled or to be tolled in blue, red for those others that could be tolled as a simple option), but the city should not be quick to adopt an easy option for revenue generation without thinking about its wider objectives.

Blue is existing and planned new toll bridges

Urban road pricing schemes can be designed to reduce congestion or generate revenue as different primary objectives. However, what is most effective or efficient for one objective may not be best for the other. Tolling crossings is easy as a revenue generator, but not exactly fair or efficient. It could be a first step on the path towards wider charging that could be distance based and help replace property taxes. Here also lies the other key issue – what to do with money collected. Road users will want to see something that benefits them, and the clear options here appear to be:

- Reduce or replace property taxes;

- Reduce fuel tax;

- Fund road improvements;

- Manage demand to reduce congestion.

Whilst some of the revenue collected is likely to be used to enhance public transport, I believe it will be critical to offset other taxes and to deliver a pricing scheme that will reduce congestion so that standards of service are improved for those who do pay.

Certainly it is early days for road pricing in Vancouver, but I look forward to the debate to come as it offers the chance to make a city, already renowned as one of the most liveable in the world, to make a quantum leap forward in transport and environmental outcomes.

UPDATE: I failed to note the interesting article from Voony's Blog about how to do congestion charging in Vancouver. I question some of the cost figures and choices made, but it is a considerable addition to the debate

2 comments:

"offers the chance to make a city, already renowned as one of the most liveable in the world, to make a quantum leap forward in transport and environmental outcomes."Yea..of course when the likes of you are done it wont be liveable anymore.

Congestion charging is a tool, but it needn't be used as proposed to raise more money. It could replace property taxes, or even other taxes, so that the effect is to transfer from motorists using a scarce resource at peak times, to people who engage in other behaviour.

If you oppose more taxation and charges per se, then it is an argument against raising MORE money, but it doesn't make sense to oppose more efficient pricing when it can be used to raise revenue differently.

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What is road pricing?

Road pricing is any system that directly charges motorists for the use of a road or network of roads. Traditionally it has meant tolls on single routes, particularly crossings such as bridges or tunnels. More recently it also includes area, cordon and zone pricing of urban areas, and distance and time based charging of whole networks. It does not include fuel or tyre taxes, or taxes on ownership or purchase of road vehicles.